Soybean supply set to bulge at the seams

Sooner or later, South American beans will be available for shipment. The Brazilian crop is expected to reach a record 83.5 million tonnes. Argentina is bouncing back from a drought-reduced crop and is expecting a 28% jump in its crop, to 51.5 million tonnes. The market should be amply supplied.

The March crop report estimated global ending stocks at 23% of usage, compared with 21.5% last season and 27.7% in 2010-11. Not large enough to get too bearish over, and low enough to leave the market vulnerable to the performance of the upcoming 2013-14 US crop.

Some estimates for U.S. soybean acreage are substantially higher than the USDA’s Outlook 77.5-million-acre estimate. Charts 1, 2, and 3 show that new-crop soybean prices lost ground to cotton, but, more importantly, maintained their strength throughout the entire planting planning season against wheat and corn. So it would be a surprise if acreage did not come in near the higher end of estimates.